Correlation Between AECOM TECHNOLOGY and Wayside Technology
Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY and Wayside Technology at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AECOM TECHNOLOGY and Wayside Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM TECHNOLOGY and Wayside Technology Group, you can compare the effects of market volatilities on AECOM TECHNOLOGY and Wayside Technology and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AECOM TECHNOLOGY with a short position of Wayside Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and Wayside Technology.
Diversification Opportunities for AECOM TECHNOLOGY and Wayside Technology
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AECOM and Wayside is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and Wayside Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayside Technology and AECOM TECHNOLOGY is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AECOM TECHNOLOGY are associated (or correlated) with Wayside Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayside Technology has no effect on the direction of AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and Wayside Technology go up and down completely randomly.
Pair Corralation between AECOM TECHNOLOGY and Wayside Technology
Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 2.3 times less return on investment than Wayside Technology. But when comparing it to its historical volatility, AECOM TECHNOLOGY is 1.94 times less risky than Wayside Technology. It trades about 0.24 of its potential returns per unit of risk. Wayside Technology Group is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 8,588 in Wayside Technology Group on August 28, 2024 and sell it today you would earn a total of 4,412 from holding Wayside Technology Group or generate 51.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AECOM TECHNOLOGY vs. Wayside Technology Group
Performance |
| Timeline |
| AECOM TECHNOLOGY |
| Wayside Technology |
AECOM TECHNOLOGY and Wayside Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM TECHNOLOGY and Wayside Technology
The main advantage of trading using opposite AECOM TECHNOLOGY and Wayside Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM TECHNOLOGY position performs unexpectedly, Wayside Technology can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Wayside Technology will offset losses from the drop in Wayside Technology's long position.| AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Microsoft | AECOM TECHNOLOGY vs. Microsoft |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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